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TMI Blog1996 (9) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... Central and State Governments as well as respective corporations. Such works include excavation of earth, drilling, construction of water channel and river bank protection. Such works of contract were not brought under the net of sales tax till the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as "the Act") was amended by the West Bengal Act 4 of 1984 inserting section 6D and amending section 2(c) of the Act. These amendments were pursuant to the 46th Amendment of the Constitution of India in the year 1982 inserting clause (29A) in article 366. The constitutional validity of the 46th Amendment inserting clause (29A) in article 366 was challenged and this Court in Builders Association of India v. Union of India [1989] 73 STC 370; (1989) 2 SCC 645 upheld the constitutionality of the said amendment. As a result of the insertion of section 6D to the Act, all transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract was deemed to be a sale of those goods by the person making the transfer and the purchase of those goods by the person to whom such transfer was made. The revenue sought to assess the appellants und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court in the case of State of Madhya Pradesh v. Orient Paper Mills Ltd. [1977] 40 STC 603; (1977) 2 SCC 77 wherein this Court has held that "royalty" is a feudalistic euphemism for price. So far as the cost of freight and delivery for carrying the goods to the worksite is concerned, the learned counsel invited our attention to the judgment of the Tribunal wherein the Tribunal has not finally decided the issue, but has left open the same for decision with reference to the facts of each case. In view of this overall submission with which we agree we do not feel it necessary to deal elaborately the contentions raised before us. For appreciation of the rival contentions, it is necessary to set out sections 2(c) and 6D of the Act as amended in the year 1984. They read as follows: "2(c). 'dealer' means any person who carries on the business of selling goods in West Bengal or of purchasing goods in West Bengal in specified circumstances or any person making a sale under section 6D....." "6D. Liability to payment of tax on the transfer of property in goods involved in the execution of works contract and rate thereof.-(1) Notwithstanding anything contained elsewhere in this Act,- (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... West Bengal Act IV of 1954), if such goods are notified for taxation under that Act, is shown to the satisfaction of the Commissioner to have been paid; (b) contractual transfer of goods, sales of which are declared tax-free under section 6; (c) contractual transfer of goods, sales of which are generally exempt from tax under sub-clause (vi) of clause (a) of sub-section (2) of section 5; (d) contractual transfer of goods, on the purchase of which tax is payable by him under section 6C; (e) such other contractual transfer, as may be prescribed. (3) The tax under this section shall be levied at the rate of four per centum of such part of the contractual transfer price as specified in sub-section (2). Explanation 1.-In this section, the expression 'contractual transfer price', used in relation to any period, shall mean the aggregate of the amounts received or receivable by a dealer during such period as valuable consideration for the transfer of property in goods used in execution of a works contract, whether or not the amount receivable as valuable consideration for such transfer is separately shown in the works contract, and shall include the value of such goods purchased, man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of tax for all goods involved in the execution of a works contract even though different rates of tax are prescribed for sale of such goods. The learned counsel for the contractors have urged that it would not be permissible to impose two different rates of tax in respect of sale of the same article, one rate when the article is sold separately and a different rate when there is deemed sale in connection with the execution of a works contract. On behalf of the States it has been submitted that it is permissible for the State to impose a particular rate of tax on all goods involved in the execution of a works contract which may be different from the rates of tax applicable to those goods when sold separately. In the field of taxation the decisions of this Court have permitted the Legislature to exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes. [See: East India Tobacco Company v. State of A.P. [1962] 13 STC 529 (SC) at page 534; [1963] 1 SCR 404 at page 411, P.M. Ashwathanarayan Shetty v. State of Karnataka [1988] Supp 3 SCR 155 at page 188, Federation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents that the principle laid down by this Court in N.M. Goel & Co. v. Sales Tax Officer [1989] 72 STC 368 squarely applies to the second point raised herein. While considering a similar issue, namely, whether there was sale of goods in view of the contract between the parties whereunder the custody and control of the goods remained with the P.W.D. and goods were only used in the construction under the contract, this Court held that "in the instant case, by use or consumption of materials in the work of construction, there was passing of the property in the goods to the assessee from the P.W.D. By appropriation and by the agreement, there was a sale as envisaged in terms of clause (10) set out hereinbefore. Therefore, in our opinion, there was a sale which was liable to tax". Though this case was sought to be distinguished before the Tribunal by contending that that ratio must be treated as one given per incuriam it was rightly rejected by the Tribunal. We are, therefore, in agreement with the conclusion reached by the Tribunal that "having considered all aspects of the matter, we hold that a sale within the meaning of section 2(g) of the 1941 Act, namely, a transfer of property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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